Poor Charlie’s Almanack Notes

By Nick (Charlie Munger) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

I’ve finished reading Poor Charlie’s Almanack, and wanted to jot down some notes that I would continually reference upon without the book since I’m about to lend it to someone.

25 Common Tendencies of Human Psychology Misjudgments:

  1. Reward and Punishment Superresponse Tendency
  2. Liking / Loving Tendency
  3. Disliking / Hating Tendency
  4. Doubt-Avoidance Tendency
  5. Inconsistency-Avoidance Tendency
  6. Curiosity Tendency
  7. Kantian Fairness Tendency
  8. Envy / Jealousy Tendency
  9. Reciprocation Tendency
  10. Influence-from-Mere-Association Tendency (Steroetypes)
  11. Simple, Pain-Avoiding Pyschological Denial
  12. Excessive Self-Regard Tendency
  13. Overoptimism Tendecy
  14. Deprival-Superreaction Tendency
  15. Social-Proof Tendency
  16. Contrast-Misreaction Tendency
  17. Stress-Influence Tendency
  18. Availability-Misweighting Tendency
  19. Use-It-or-Lose-It Tendency
  20. Drug-Misinfluence Tendency
  21. Senescence-Misinfluence Tendency (Affected by by old age)
  22. Authority-Misinfluence Tendency
  23. Twaddle Tendency
  24. Reason-Respecting Tendency
  25. Lollapalooza Tendency

10 Examples of Eliminating / Minimizing Common Tendencies of Human Psychology Misjudgments:

  1. Carl Braun’s communication practices (5Ws for each communication)
  2. The use of simulators in pilot training
  3. The system of Alcoholics Anonymous
  4. Clinical training methods in medical schools
  5. The rules of the U.S. Constitutional Convention (totally secret meetings, no recorded vote by name until final vote, votes reversible at any time before end of convention, one vote on whole constitution)
  6. The use of Granny’s incentive-driven rule to manipulate oneself toward better performance of one’s duties
  7. The Harvard Business School’s emphasis on decision trees
  8. The use of autopsy equivalent at Johnson & Johnson
  9. Double blind studies required in drug research by F.D.A.
  10. Warren Buffett rule for open-outcry auctions: Don’t go.

Charlie Munger’s Recommended Books:

  • Deep Simplicity: Bringing Order to Chaos and Complexity (John Gribbin)
  • F.I.A.S.C.O.: The Insider Story of a Wall Street Trader (Frank Partnoy)
  • Ice Age (John & Mary Gribbin)
  • How the Scots Invented the Modern World: The True Story of How Western Europe’s Poorest Nation Created Our World & Everything in It (Arthur Herman)
  • Models of My Life (Herbert A. Simon)
  • A Matter of Degrees: What Temperature Reveals About the Past and Future of Our Species, Planet and Universe
  • Andrew Carnegie (John Franzier Wall)
  • Guns, Germs and Steel: The Fates of Human Societies (Jared M. Diamond)
  • The Third Chimpanzee: The Evolution and Future of the Human Animal (Jared M. Diamond)
  • Influence: The Psychology of Persuasion (Robert B. Cialdini)
  • The Autobiography of Benjamin Franklin (Benjamin Franklin)
  • Living Within Limits: Ecology, Economics, and Population Taboos (Garrett Hardin)
  • The Selfish Gene (Richard Dawkins)
  • Titan: The Life of John D. Rockefeller, Sr. (Ron Chernow)
  • The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (David S. Landes)
  • The Warren Buffett Portfolio: Mastering the Poewr of the Focus Investment Strategy (Robert G. Hagstrom)
  • Genome: The Autobiography of a Species in 23 Chapters (Matt Ridley)
  • Getting to Yes: Negotiating Agreement Without Giving In (Roger Fisher, William Ury and Bruce Patton)
  • Three Scientists and Their Gods: Looking for Meaning in an Age of Information (Robert Wright)
  • Only the Paranoid Survive (Andy Grove)

Peter D. Kaufman’s Recommended Books:

  • Les Schwab: Pride in Performance (Les Schwab)
  • Men and Rubber: The Story of Business (Harvey S. Firestone)
  • Men to Match My Mountains: The Opening of the Far West (Irving Stone)
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